As indicated by economists of the Center for Tax Studies (CET) of the Austral University, the Argentine tax system presents inconsistencies of all kinds. YesThey have promised tax cuts that in the end turn out to be temporary and on the contrary, taxes are applied that should be transitory and in the end they remain. Some of this happened in 2023 between Profits and distortionary taxes for economic activity such as the COUNTRY tax.
The first of them, considered one of the pillars of the system along with VAT because it is charged throughout the country and is distributed with the provinces, fell to third place in fundraising importance if only the system that depends on the Federal Public Revenue Administration (AFIP) is taken. That is the novelty of last year, because it is a tax that was always in second place. If the national consolidated is taken, it fell to fourth, according to CET data.
“Beyond some attempts to reduce tax pressure, the experience of our country shows that, for the most part, lTax cuts have been promised permanent and have been temporarywhile the increases in tax pressure that were explained as temporary have always been permanent,” says the CET study.
Only 8 taxes explained 94% of the national consolidated collection in 2023 which includes the provinces. In descending order they are VAT, Contributions and Contributions to Social Security, Provincial Gross Income, Profits, Bank Debits and Credits, COUNTRY, Withholdings on exports and Personal Property.
The discussion about fiancees discounts are relevant regarding Income Taxwhich in 2023 was practically eliminated for employees and that now the government It discusses its restitution with the governors due to the strong deterioration it caused in the State accounts.
The CET estimates thatIncome Tax collection explained 15.6% of the treasury’s income last yearwhile Social Security taxes became 18.2%, as well as provincial Gross Income.
The report states that “despite the circumstantial drop in tax pressure that ended Alberto Fernández’s government, researchers observe an elevated pattern.” “In the last 14 years, there have been no significant changes that would lead to greater progressivity to the tax system, but rather temporary modifications with a tax collection purpose,” the study states.
For example, one of the taxes supposedly born temporarily, to discourage people from buying official dollars, The PAIS Tax came to represent 0.8% of GDP in collection in 2023, in the same way that withholdings on exports fell from 2.% to 0.8% due to the effect of the drought.
The tax For an Inclusive and Solidarity Argentina registered a real growth, discounting the effect of inflation of 324% last yearcompared to 2022. If the government intends to unify the different dollar markets and lift restrictions, vwill still have to replace it with those that can be generated with the restitution of Profits. Of course, the COUNTRY Tax is not shared, while Profits would only be left to the national treasury 44%.
According to the CET, since the departure From the 2001 crisis and until today, Argentine tax pressure “was positioned at levels of 25% to 30% while the emerging ones never exceeded 23%.”
The government of Alberto Fernández ended with a slight drop that was not the product of a positive circumstance, taking into account that the tax pressure of a country is defined as a relationship between collection and GDP. “Despite the upward trend maintained until 2022, l“In the absence of liquidation of exports and the change in the Income Tax prior to the elections, they modified the direction of the tax pressure in the last year of government.”explains the CET.
Collection deficiency
Another element that plays against the system is the efficiency to collect at a lower cost. In this, tax agencies are behind other countries.
“According to the data of the International Survey on Revenue Administration (ISORA), Argentina is the third country with the highest cost in the region with 1.1% as a percentage of net collection and is above the Latin American average, which is 0.78%.” the report says.
The work indicates that “the performance index of the tax system continues to show that Argentina only partially achieves the objectives of sufficiency and efficiency, cwith a score of around 4 points out of 10”.
“Although the tax complexity and the high tax burden are very relevant, the marked and sustained fiscal deficit of our country is also one of the main factors of this negative performance.” says the job.
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Source: Ambito
